USA: Anheuser-Busch Cos. reports improved sales and earnings for the First Quarter 2006

Anheuser-Busch reported on April 26 improved sales and earnings for the first quarter 2006 today at its annual meeting of shareholders held in Orlando, Fla. Consolidated net sales increased 5.4 percent in the first quarter 2006 and earnings per share, excluding a one-time gain in 2005, increased 4.9 percent . Domestic beer volumes were the highest first quarter results in the company's history.

"Coming off a difficult year in 2005, Anheuser-Busch achieved encouraging first quarter 2006 results," said Patrick Stokes, president and chief executive officer of the company. "Through a number of sales initiatives we have restored our domestic beer volume growth momentum, and we successfully implemented a moderate price increase early this year. The cost pressures we experienced last year continue, but at a lesser rate, and we have implemented a number of initiatives to reduce costs and enhance productivity. Anheuser-Busch continues to expect sales and earnings growth in 2006 2/, and we are off to a good start."

Domestic beer shipments-to-wholesalers increased 4.6 percent for the first quarter 2006, and actual wholesaler sales-to-retailers were up 3.3 percent. On a selling day adjusted basis, sales-to-retailers were up 1.7 percent. Shipments to wholesalers are not selling day adjusted. Our sales-to-retailers increase was led by Bud Light, which grew mid-single digits (selling day adjusted). Wholesaler inventories at the end of the first quarter 2006 were about one day lower than at the end of the first quarter 2005.

The company's estimated domestic market share (excluding exports) for the first quarter 2006 was 51.2 percent, compared to first quarter 2005 market share of 51.1 percent. Domestic market share is based on estimated U.S. beer industry shipment volume using information provided by the Beer Institute and the U.S. Department of Commerce.

International volume, consisting of Anheuser-Busch brands produced overseas by company-owned breweries and under license and contract-brewing agreements, plus exports from the company's U.S. breweries to markets around the world, increased 9.4 percent for the first quarter 2006, driven primarily by sales in China.

Worldwide Anheuser-Busch beer sales volume for the first quarter 2006 rose 5.4 percent, to 30.4 million barrels. Worldwide beer volume is comprised of domestic volume plus international volume.

Equity partner brands volume, representing the company's share of its foreign equity partners' volume reported on a one-month lag, increased 47.9 percent for the first quarter of 2006 due to the strong volume performance of Grupo Modelo and the inclusion of Tsingtao volume. The company began accounting for Tsingtao on an equity basis in May 2005. Total brands volume increased 10.9 percent for the first quarter 2006.

Effective in the first quarter 2006, Anheuser-Busch adopted FAS 123R, "Share-Based Payment." FAS 123R requires the recognition of stock compensation expense for stock options and other forms of equity compensation, based on the fair value of the instruments on the date of grant. In order to enhance the comparability of all periods presented and provide the fullest understanding of the impact that expensing stock compensation has on the company, Anheuser-Busch elected to apply the modified retrospective method of adopting FAS 123R. The company has therefore recast comparative 2005 results to incorporate the impact of previously disclosed pro forma stock compensation expense. For financial reporting purposes, stock compensation expense is included in either cost of sales or marketing, distribution and administrative expenses, depending on where the recipient's cash compensation is reported. Stock compensation expense is classified as a corporate item for segment reporting.

Net sales increased 5.4 percent, driven primarily by increased domestic beer sales, a 5.5 percent increase in international beer segment net sales from higher volume and a 13 percent increase in packaging operations sales. Entertainment sales declined due to the Easter holiday falling in the second quarter in 2006 vs. the first quarter in 2005.

Domestic beer segment sales increased 4.5 percent on increased beer sales volume. Domestic revenue per barrel 3/ was essentially level with the comparable first quarter 2005, and grew 4.3 percent vs. the fourth quarter 2005. The increase from the end of 2005 reflects the company's implementation of price increases and discount reductions on over half of its domestic volume in the first quarter.

Income before income taxes decreased 1.6 percent on a reported basis but increased 0.9 percent 1/, excluding the $15.4 million gain ($.024 per share) in 2005 from the sale of the company's equity interest in Port Aventura. The increase is due to slightly higher profits in domestic beer, international beer and packaging operations, and lower corporate costs, partially offset by lower entertainment results due to the timing of the Easter holiday.

Income before income taxes for domestic beer was up $1 million due to higher volume mostly offset by increased cost of sales.

International beer pretax income was up slightly, primarily due to higher volume.

Packaging segment pretax income increased $3 million primarily due to higher profits from can manufacturing operations. Entertainment segment pretax results declined $11 million due primarily to the timing of the Easter holiday.

Equity income increased $16 million in the first quarter 2006, reflecting the benefit of Grupo Modelo volume and pricing growth and the inclusion of Tsingtao equity earnings.

On a reported basis net income in the first quarter decreased 0.2 percent and diluted earnings per share were level vs. the first quarter 2005. Excluding the one-time gain in 2005 net income increased 3.7 percent 1/ and diluted earnings per share were up 4.9 percent 1/. Earnings per share continue to benefit from the company's ongoing share repurchase program. The company repurchased nearly 6 million shares in the first quarter.
Other Matters

Anheuser-Busch will conduct a conference call with investors to discuss first-quarter earnings results at 3 p.m. CDT today. The company will broadcast the conference call live via the Internet. For details visit the company's site on the Internet at www.anheuser-busch.com.

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